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What You Need to Know About Real Estate Fraud and How to Protect Yourself

What You Need to Know About Real Estate Fraud and How to Protect Yourself

Since real estate transactions involve large sums of money, crooks, both big and small, can sneak in. Recently, real estate fraud has become very common in Canada. In this regard, the most vulnerable groups are senior citizens, newcomers to Canada, and women.  

The ways such frauds occur are so numerous that one must give due diligence to keep himself informed and prevent any such occurrence. Because, in this case, prevention is the only cure. Once you have been defrauded, reclaiming your rights is a long journey. Read on to learn about various kinds of fraud and how to save yourself from them.  

Possession Fraud
It is possible that a crook gains control of your property while you are away and rents it to several innocent people while taking deposits from them separately. Then, you might see trucks filled with luggage moving toward your house to take possession for the rent paid. It may be a scam of tens of thousands of dollars, leaving you in dire problems.
Identity Fraud
Identity fraud is another kind of real estate fraud you should know about. A fraudster may steal your identity and get loans or mortgages against your property. They may also conduct a real estate transaction in your name without your knowledge and cause liabilities for you amounting to millions.
Toronto Police Service
In this case, you can estimate how much money will be involved if the crooks manage to sell your house. Similarly, to lead their transaction to the end, they may get the new buyers to move in while you are still away.
Title Fraud
According to CBC News, Real estate title fraud remained the top-read story in 2023.

Organized criminals sell hundreds of houses without the owners’ knowledge. In one such case, someone posed as the 95-year-old house owner and sold it.

Organized criminals sell hundreds of houses without the owners’ knowledge. In one such case, someone posed as the 95-year-old house owner and sold it.

(Read the story here:

https://www.cbc.ca/news/canada/toronto/prevent-title-insurance-fraud-1.6711615)

In another incident, a man and a woman used fake identification documents to portray themselves as homeowners and got the realtor to enlist the Property for sale.  
“It can take considerable time, money, and effort to restore your tile and any fraudulently registered mortgages.”
– First Canadian Title insurance company

Such fraud occurs when fraudsters steal the title to your house. Likewise, it also originates from identity fraud. After stealing the title, the crooks can misuse it in: 

  • Selling your property to an unsuspecting buyer
  • Remortgaging the house
  • Availing other benefits
How to Protect Your Identity
  • Watch who you share your personal information with
  • Check your bank statements and other reports for any irregular activity
  • Shred your documents into pieces before disposing of them
  • Keep updating your details with government institutions
How Can Title Insurance Help You Keep a Firm Hold on Your Property?

Title insurance secures any financial losses and expenses you incur because of title fraud.

It protects homeowners from fraudulent claims arising against their property and also covers the expenses associated with reclaiming the title rights to their property if this happens.  

Mortgage and Evaluation Fraud
In 2002, a Canadian beautician lost all her savings to one such fraud. Her notary offered to assist her with giving the money in loan against a house. She later realized that the borrower had exaggerated the value of the property many times and took away her money. She was never able to recover it, and the culprit is still at large.

(You can read this story here:

https://vancouversun.com/news/local-news/accused-mastermind-of-b-c-s-biggest-real-estate-fraud-has-avoided-standing-trial-for-past-14-years)

Real Estate and Criminal Networks
A decade ago, Canadian authorities confiscated a large estate. Unbeknownst to its unsuspecting owner, the estate housed a large illegal opium farm concealed from an onlooker. It involved millions of dollars. Hence, it is likely that illicit gangs and some officials may have a hand in it. Ultimately, the owner whose property the authorities confiscated lost large sums of investment.

So, when you are going to invest large sums of money in real estate, make sure you keep your eyes open. 

Fraud by Renters
Homeowners who rent out their houses should be very considerate because the renters have physical access to the Property.
The renters can access some information from the mail that the post office still delivers to the same address instead of the landlord’s new address. They can access important documents such as a driving license renewal form or tax returns in this case. Hence, your exposure to fraud is manifest in these cases.
How to Prevent Property Fraud?
  • Verify the credentials of the person you're dealing with.
  • Check online occasionally if any of your property has been unduly listed.
  • Purchase title insurance
  • Update a forward address when you have rented out your residence
  • Make sure your documents don't fall into the wrong hands
  • Be suspicious while making transactions and look for anything out of place
  • Rely on banking information rather than cash payments
  • Perform backend checks on the persons you are dealing with
In real estate dealings, a minor omission can cause a considerable loss. Investment in real estate is usually one of your most significant expenditures. So, given the stakes involved, you should keep an expert on board and perform your transactions with due diligence.

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